Brown Commends Fed Proposal to Curb Wall Street's Commodities Holdings
WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – today commended the Federal Reserve’s proposed rule to limit risks posed by Wall Street bank’s involvement in physical commodities, such as aluminum, coal, and oil.
Brown has long pushed the Fed to issue its proposed rule, which would require banks involved in physical commodity activities to boost capital to cover the risks of such investments. Under the Fed’s proposal, banks would face tighter limits on trading in these markets, and could no longer engage in the business of running power plants. In addition, banks would be prohibited from owning and storing copper.
“For years, Ohio consumers and manufacturers have raised concerns about paying more for their gas, beer, soft drinks, or electricity because of excessive Wall Street speculation,” Brown said. “The Federal Reserve’s proposal is encouraging news for taxpayers, consumers and manufacturers, and for the safety of our financial system. I will continue urging the Fed to make sure the final rule is as strong as possible.”
Owning and storing physical commodities, such as aluminum in bank-owned warehouses or oil in storage tankers, provides big banks and financial institutions with opportunities to effectively drive up the cost of everyday commodities and products, including gasoline, canned soft drinks and beer, and electricity.
In February, Brown urged the Fed to finish its proposed rule without further delay. Brown led hearings to shine a spotlight on this issue in 2013 and 2014 during his tenure as chairman of the Banking Subcommittee on Financial Institutions and Consumer Protection.
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